This month saw new Government regulations proposed for two key issues that will have significant effects on the residential property rental sector. Submissions were called for on proposed changes to the Residential Tenancies Act and the Healthy Homes Guarantee Act.

The current Government says its proposed reform of tenancy laws aims to “make life better for renters” by:

Ensuring the law appropriately balances the rights and responsibilities of tenants and landlords and helps renters feel at home

Modernising the legislation so it can respond to the changing trends in the rental market

Improving the quality of boarding houses and the accountability of boarding house landlords.

Contentious proposals on which the Government is seeking feedback include:

Ending no cause terminations while ensuring landlords are still able to end tenancies for justifiable reasons

Increasing the amount of notice a landlord must generally give tenants to terminate a tenancy from 42 days to 90 days

Whether changes to fixed-term agreements are justified to improve security of tenure

Limiting rent increases to once a year

Whether there should be limitations on the practice of ‘rent bidding’

Whether further controls for boarding houses are needed to provide adequate protection for boarding house tenants

Introducing new tools and processes into the compliance and enforcement system.

While some proposals are welcomed by landlords and property managers, some of the proposed changes, including increasing the termination notice period to 90 days would make problem tenancies significantly harder to deal with.

There has been a call from the New Zealand Property Investors Federation for stronger rules around rental payments to dissuade tenants from not paying.This could involve the ability to charge interest on outstanding rent, the ability to charge tenants’ credit cards or exemplary damages if they don’t pay their rent, and faster access to the Tenancy Tribunal for rent arrears cases.

Tony Alexander, Chief Economist at the Bank of New Zealand, predicts the regulations will make property owners more selective about who they allow into their properties, and rent rises when tenants change will likely increase while demand for state housing also rises. He said some investors would sell, worsening the housing shortage.

To find out more about the proposed changes visit the Ministry of Housing & Urban Development site –